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WeWork's "Millennial Office Worker Narnia" Communal Living Concept Is Struggling
By
Emma Whitford
Published Aug 10, 2016
Modified Aug 10, 2016
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By
Emma Whitford
Published Aug 10, 2016
Modified Aug 10, 2016
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To live above the Wall Street offices of WeWork, an international co-working startup recently valued at $16 billion, an aspiring full-time disrupter has a number of options. Are you interested in paying $1,700 per month for a room with a fold-out Murphy bed? Or perhaps a Murphy bed behind a curtain in a shared living room? If you prefer a kitchen and bathroom to yourself, no problem—the startup rents fully-furnished studios for $2,745, not including the $125 monthly amenities fee that insures unlimited coffee, San Pellegrino, Smart Water, bitters, internet, cleaning and laundry. A small price to pay to bask in "the awesome power of community."
Back in 2014, WeWork told prospective investors that it would have 14 of these coliving spaces up and running by the end of 2016. Now, the Wall Street Journal reports, it won't be expanding beyond its current NYC and Crystal City, Virginia locations before year's end. A Seattle location isn't expected to open until 2018, and no other WeLive locations have been publicly announced.
The startup has struggled, WSJ reports, to find lenders willing to finance the hefty renovations needed to convert an existing residential building into what Forbes described this spring as a "millennial office worker Narnia"—tiny bedrooms and studios plus communal dining rooms (one for every three floors, which are clustered together in so-called "neighborhoods," each with their own laundry-game room and barre-yoga studio). A spokesman for the company countered that financing is not an issue, but that the company has struggled to find buildings that can accommodate the unusual WeLive floor plan.
And on the renter side, the challenge is to find people who are willing to pay the asking price for apartments that average 450 square feet, when they could arguably get more space in a traditional apartment for less. "I just don't know that people would want to pay more for that," Jonathan Kushner, president of Kushner Real Estate Group and cousin of Donald Trump's son-in-law, told WSJ. He considered building a WeLive in Jersey City, but passed.
Some of WeWork's office spaces are struggling to fill up, as well, and have lowered rents accordingly. WSJ reports that the DUMBO location, one of the city's largest WeWork outposts (there are 32 in total), recently slashed its rents for a one-person office from $750 to $550.
WeWork told WSJ that it's on course to reach 80,000-90,000 members by the end of the year, double last year's membership. It's pushed back its target for $1 billion in annual revenue from this year to next year, but says it will meet that new goal.
As for the coliving concept, "WeLive remains an incredible opportunity for the company," a WeWork spokesman said in a statement Wednesday. "We are perfecting the product but we are bullish on the future for the concept."
The NYC location is currently at 100% capacity, he added, while the Virginia WeLive is 80% full.
Last month, Gotham Gazette reported that Mayor de Blasio's 2017 reelection campaign is renting out WeWork space in NYC—at the startup's 222 Broadway location. The outlet confirmed payments of $11,500 in June for office rent and a security deposit, and another $4,400 rent payment in July. The Mayor, who was cleared of breaking campaign finance laws last month, has also received hefty donations from WeWork executives—in April, the Real Deal reported that WeWork Senior VP Arana Hankin was the biggest bundler of donations to de Blasio's re-election campaign: to the tune of $68,750.
Tagged
coliving
melenials
WeLive
wework
Emma Whitford
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